California will pay JPMorgan Chase an annualized interest rate of 3% on the money. The loan is expected to be repaid by the end of September, after Lockyer sells up to $10.5 billion of so-called revenue anticipation notes to investors.

The state began issuing IOUs, formally known as registered warrants, to vendors and other creditors in early July after running short on cash. Through Tuesday, 414,000 IOUs worth $2.26 billion were outstanding, according to state Controller John Chiang.

Holders of the IOUs will earn a 3.75% annualized tax-free interest rate on the paper until the redemption date.

The Treasurer will redeem IOUs in person at the same address. The walk-in office hours will be Monday through Friday from 8 a.m. to 4 p.m., starting Sept. 4.

IOU holders who want to redeem via mail can send their IOUs to the Treasurer before Sept. 4. That will help the office process the IOUs more quickly come Sept. 4. More details about how to redeem IOUs are available at www.treasurer.ca.gov